Correlation Between Argo Investments and 88 Energy
Can any of the company-specific risk be diversified away by investing in both Argo Investments and 88 Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Argo Investments and 88 Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argo Investments and 88 Energy, you can compare the effects of market volatilities on Argo Investments and 88 Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Argo Investments with a short position of 88 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Investments and 88 Energy.
Diversification Opportunities for Argo Investments and 88 Energy
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Argo and 88E is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Argo Investments and 88 Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 88 Energy and Argo Investments is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Argo Investments are associated (or correlated) with 88 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 88 Energy has no effect on the direction of Argo Investments i.e., Argo Investments and 88 Energy go up and down completely randomly.
Pair Corralation between Argo Investments and 88 Energy
Assuming the 90 days trading horizon Argo Investments is expected to generate 30.72 times less return on investment than 88 Energy. But when comparing it to its historical volatility, Argo Investments is 45.0 times less risky than 88 Energy. It trades about 0.12 of its potential returns per unit of risk. 88 Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.30 in 88 Energy on August 31, 2024 and sell it today you would lose (0.10) from holding 88 Energy or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Argo Investments vs. 88 Energy
Performance |
| Timeline |
| Argo Investments |
| 88 Energy |
Argo Investments and 88 Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argo Investments and 88 Energy
The main advantage of trading using opposite Argo Investments and 88 Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argo Investments position performs unexpectedly, 88 Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in 88 Energy will offset losses from the drop in 88 Energy's long position.| Argo Investments vs. Energy Resources | Argo Investments vs. 88 Energy | Argo Investments vs. Amani Gold | Argo Investments vs. A1 Investments Resources |
| 88 Energy vs. Hansen Technologies | 88 Energy vs. Nufarm Finance NZ | 88 Energy vs. National Storage REIT | 88 Energy vs. Ras Technology Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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